Supriya LifeScience IPO Review – Is it good or bad for long term investment?

Supriya LifeScience IPO – Review - Is it good or bad for long term investmentSupriya LifeScience IPO (Supriya LifeScience Limited IPO) Details

Mumbai based Supriya LifeScience is coming up with an IPO that would open for subscription on 16th December 2021. Supriya LifeScience is the leading manufacturer of Active Pharmaceutical Ingredients (APIs). Company has strong revenue growth in the last 3.5 years. It has significant growth in profits in the last few years. Should you invest in Supriya LifeScience IPO? This article would provide IPO details, Dates, GMP, Listing Date and conclusion on whether this is good or bad for investment.

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About Supriya LifeScience Limited

Company is one of the key Indian manufactures and suppliers of Active Pharmaceutical Ingredients (APIs) with a focus on research and development.

By the end of Oct-21, it has niche offerings of 38 APIs focused on diverse segments such as antihistamine, analgesic, anaesthetic, vitamin, anti-asthmatic and antiallergic.

They have consistently been the largest exporter of Chlorpheniramine Maletas and Ketamine Hydrochloride from India contributes 45% to 50% and 60%-65% respectively of the total API exports from India during 2017 to 2021.

The company is the largest exporters of Salbutamol Sulphate in India contributing to 31% of API Exports from India in 2021 in terms of volume.

Its pharma business is organised into domestic and export sales.

Its products are exported to 86 countries to 1,296 clients including 346 distributors.

Company has grown API business in several countries and its current revenue portfolio as of the end of Sep-21 are Europe (18%), Latin America (12%), Asia (Excl India) (36%), North America (2.3%) and India (26.4%).

It has modern manufacturing facility in Maharastra spread across 23,806 sqmts having a reactor capacity of 847 KL/day including 7 clean rooms. It is planning to expand its capacity and acquired land near to its existing facility.

Supriya LifeScience IPO details and Price

IPO Opening Date 16-Dec-21
IPO Closing Date 20-Dec-21
Issue Type Book Built Issue IPO
Face Value Rs 2 per equity share
IPO Price band Rs 265 to Rs 274 per equity share
Lot Size 54 Shares
Min Order Quantity 54 Shares
Listing at BSE and NSE
Total Issue Size Rs.700 Crores
    Fresh issue     Rs.200 Crores
    OFS     Rs.500 Crores

Supriya LifeScience IPO RHP

What are the strengths of Supriya LifeScience Limited?

1) Company with significant scale with leadership position across key & niche products

2) It has backward integrated business model

3) It is geographically diversified revenues with a global presence across 86 countries

4) Company has advanced manufacturing and research and development capabilities

5) Company has consistent strong financial performance due to de-risked business model

6) It has experienced senior management team and qualified operational personnel

What are the Objects of the IPO Offer?

Supriya Lifescience IPO Size is Rs 700 and below are the objects of the IPO:

1)  Offer for Sale (OFS) Rs 500 Crores:  Under OFS, selling shareholders would sell their shares and company would not get any money from this IPO proceeds.

2) Fresh issue of Rs 200 Crores:  Fresh issue towards the following purposes:

i) Funding capital expenditure requirements of the company

ii) Repayment and/or pre-payment, in full or part, of certain borrowings availed by the company and

iii) General corporate purposes

Who are the promoters of Supriya LifeScience Limited?

Satish Waman Wagh is the promoter of the company.

How is the company financial track record?

Here are the total assets, revenues and profits of the company in the last 3 years and 6 months.

Financial Year ending / Period ending (Amt in Mns)
Particulars FY19 FY20 FY21 Sep-21
Total Assets 2,530.5 3,364.0 4,458.2 5,041.0
Revenues 2,858.6 3,227.1 3,962.2 2,300.6
Profit After Tax 394.2 733.7 1,238.3 659.6
Profit % 13.79% 22.74% 31.25% 28.67%

Why to invest in Supriya LifeScience IPO?

Here are the positive factors in this company.

1) The company is one of the leading API manufacturing companies in India.

2) Its niche and diverse segment’s products are exported to over 86 countries. The company has advanced research, development capabilities with strong financial track record due to de-risked business model.

2) Company has strong revenue growth in the last 3 years. Its revenues increased from Rs 285.8 Crores (FY19) to Rs 396.2 Crores (FY21).

3) The company’s margins have improved significantly in the last 3 years. Its profits increased from Rs 39.4 Crores (FY19) to Rs 123.8 Crores (FY21).

Risk Factors of investing in Supriya LifeScience IPO

1) Company majority of IPO proceeds (Rs 500 Crores) is Offer for Sale where the company would not get any money as these would go to selling shareholders.

2) Company derives a significant portion of its revenue from the sale of certain products and any reduction in demand for these products could have an adverse effect on business.

3) The company has a significant portion of its revenue from few clients. Any loss of such clients can affect company business.

4) Its international operations expose them to complete management, legal, tax and other risks which can adversely affect its business.

5) Covid-19 pandemic or any other future pandemic or health emergencies can adversely impact the business.

6) Company business is subject to extensive regulation. If they fail to comply with regulations, it can affect business.

7) Investors should read complete risk factors indicated in the RHP of the IPO document before investing in this IPO.

FAQs – Supriya Life Science IPO

What is Supriya LifeScience IPO Rating?

Company do not require to get IPO rating. Currently, Supriya LifeScience short term rating is A2 Outstanding and long term rating as BBB+ (Stable) Outstanding by ICRA Ratings.

How much portion allocated to each group of investors in this IPO?

1) QIB - Not less than 75% of the offered shares 2) Retail - Not less than 10% of the offered shares 3) NII / HNI - Not less than 15% of the offered shares

What is the minimum amount to subscribe to this IPO?

Investors need to apply for 54 shares at minimum lower price band of Rs 265 per share = Rs 14,310. Similarly, the minimum amount to be applied on upper price band of Rs 274 = Rs 14,796.

Is it good or bad for investment?

Invest should always invest in a company that has strong financial track record. This company has generated strong revenue growth in the last 3.5 years. Company has significant growth in profits of the company in the last few years.

What is Supriya LifeScience IPO GMP today?

GMP is nothing but the premium at which the shares are trading in offline market. This is just an indication about the IPO price as it is unorganized market. Supriya LifeScience IPO GMP is not available as there are no trades happening.

Supriya LifeScience Limited IPO Valuation

1) Supriya Lifescience IPO price band is Rs 265 to 274 per share.

2) If we consider last 3 years weighted average EPS of Rs 12.7 and the upper price band of Rs 274, P/E works out to be 21.57x.

3) Similarly, if we consider FY2021 EPS of Rs 16.92 and the upper price band of Rs 274, P/E works out to be 16.19x.

4) If we consider 6 months ended Sep-21 EPS and annualise for FY22, P/E works out to be 15.21x.

5) Means company is asking IPO price of Rs 274 in the P/E ratio of 15.21x to 21.57x

There are listed peers like Divis Laboratories trading at P/E 65x (Highest) and Aarti Drugs trading at P/E 16.8x (Lowest) and the industry average is 23x. Hence, the IPO price of Supriya LifeScience at P/E of 15.12x to 21.5x is underpriced and available at attractive valuations.

Supriya LifeScience IPO dates for subscription, Allotment and Listing

Offer Open 16-Dec-21
Offer close 20-Dec-21
Finalization of Allotment 23-Dec-21
Initiation of Refunds 24-Dec-21
Credit to Demat Account 27-Dec-21
IPO Shares Listing Date 28-Dec-21

How to buy Supriya LifeScience IPO online through Zerodha?

If you do not have Zerodha account, sign-up here and proceed to next step.

If you have demat account with Zerodha, you can apply this IPO online using the UPI as a payment gateway. Zerodha customers can apply in this IPO by login into Zerodha Console submitting an IPO application form.

Follow below steps to apply this IPO in Zerodha platform:

1) Visit the Zerodha portal and login to Console.

2) Go to Portfolio and click the IPOs link.

3) Visit ‘Supriya LifeScience IPO’ row and click the ‘Bid’ button.

4) Enter your UPI ID, Qty and the Price which you want to bid.

5) Click on ‘Submit’ IPO application form.

6) Visit the UPI App (net banking or BHIM) to approve the mandate.

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Supriya LifeScience IPO Review and Analysis

After going through all these points, you might be wondering whether Supriya LifeScience IPO is good or bad for investment?

Supriya LifeSciences Limited one of the leading API manufacturing companies in India.

Company has generated strong revenue growth in the last 3.5 years.

The company’s margins shown significant improvement in the past few years.

The IPO price is attractively priced.

Subscribe to the IPOStock markets are volatile and taking corrections now and then, hence investors should be little cautious about investing in IPOs.

Considering all these positive and risk factors indicated above, investors can invest in this IPO for medium to long term perspective.

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Suresh KP

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